Robber Barons, Railroads, and the Making of Modern America
By Michael Hiltzik
“Type of the modern — emblem of motion and power — pulse of the continent,” Walt Whitman wrote of a steam locomotive in 1876. For much of the 19th century, the railroad served as the paramount symbol of modernity in the United States, of the conquest of time and space and the creation of a continental nation. The railroad companies, the first large national corporations, produced and destroyed wealth on an unprecedented scale. The men who financed and controlled them became household names, hailed and reviled for their power and riches.
“Iron Empires: Robber Barons, Railroads, and the Making of Modern America,” by the Pulitzer Prize-winning journalist Michael Hiltzik, plunges into the battles and escapades of the entrepreneurs and investors who created the national rail system. Many of the early railroad financiers, like Jay Gould and Jim Fisk, Hiltzik argues, were “pirates,” with little interest in building or operating efficient transportation systems. Like many start-up entrepreneurs today, they made their money not from continuing operations but through self-dealing arrangements, complicated stock market maneuvers, lobbying for government subsidies and cashing out of companies with overvalued stock and excessive debt. Their epic fights with one another — like Gould’s struggle with Cornelius Vanderbilt to control the Erie Railroad, which Hiltzik relates with gusto — had plenty of drama and skulduggery, but did little or nothing to promote economic development.
As competing entrepreneurs built parallel lines with capacity exceeding demand, hyped-up stock prices and falling freight rates repeatedly drove railroad companies into financial crisis. Railroad failures sometimes triggered broader economic downturns, as in 1873, causing widespread misery. J. Pierpont Morgan elevated himself into something like a one-man central bank by bringing about mergers and arrangements that lessened ruinous competition, taking handsome fees for his services. Edward H. Harriman never quite achieved Morgan’s Olympian financial and social position, but he wins Hiltzik’s admiration for his mastery of railroad operations and his willingness to invest heavily in upgrading the equipment and infrastructure of the enormous network he controlled.
The maneuvers and countermaneuvers of the railroad titans can be dizzying. It takes Hiltzik four chapters to cover the 1901 effort by Harriman to take control of the Northern Pacific Railroad, which ended only when Morgan set up a trust that assumed control over both that line and the competing Great Northern Railway (an arrangement the Supreme Court soon declared illegal). An able narrator, with an eye for telling detail, Hiltzik makes what otherwise might seem arcane financial details engrossing.